Gold bounce confounds yesterday’s early selloff
Despite the $1178 level previously acting as a reliable level of support throughout the past two months, the June price action has been very choppy and has often failed to truly respect the level. Yesterday’s gold selloff came following a strong move below support during the first week of the month and things initially pointed towards a move back to the 5 June low of 1162.
However, a strong round of buying in the afternoon brought about a sizeable doji, with a long lower shadow. This candle, which represents indecision, points to a possible reversal of trend. Thus, today will be crucial to note whether we are watching the beginning of a move higher or just a short-term retracement higher.
As such, a move above $1192 would bring a bullish medium-term outlook for a move back towards $1224. A move back below $1173, however, would point to a resumption of the recent selloff and thus a move towards $1163.